This is a summary of the article “Insurance Psychology 101” by Dorothy L. Andrews, published in The Actuary Magazine in December 2019/January 2020. The article discusses how the psychological profile of consumers will shape the future of insurance products and services, especially for the millennials and younger generations who are born digitally and socially responsible.

The article highlights the following points:

• Millennials are the most studied generation to date, and they have different preferences and values than previous generations. They are more fiscally conservative, socially responsible, and psychologically needy. They want insurers to respond to their individual needs with products that are easy to understand, acquire, cost-efficient, well-managed, and provide protection for their long-term needs through retirement.
• Millennials are burdened with more than $1 trillion of debt, mostly from student loans and credit cards. They have lower average net worth and homeownership rates than Generation X, but higher average retirement savings and education levels. They also use credit cards for rewards programs, which may indicate a lack of financial literacy.
• The need for financial literacy for millennials and younger generations is critical, and it presents a golden opportunity for insurers to develop financial IQs and establish long-term bonds with maturing consumers. Insurers can leverage technology, data analytics, behavioral science, and media psychology to understand and cater to the consumers of the future.
• Media psychology is essential to appeasing and understanding the insurance needs of future consumers whose native language is digital and a medium for human connectedness is technology. Media psychology studies how media influences human behavior, cognition, emotions, and social interactions. It can help insurers design products and services that are appealing, engaging, personalized, and trustworthy for the digital natives.

The article concludes by stating that understanding the psychological profile of consumers will be key as we become more connected through technology and more disconnected interpersonally.

Source: Andrews, D.L. (2019). Insurance Psychology 101. The Actuary Magazine. Retrieved from https://www.theactuarymagazine.org/insurance-psychology-101/

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